“Canadian dream” far more difficult to achieve for younger Canadians 

For boomers, the “Canadian dream” more or less echoed the dream our parents had – education, work, a house, a family, maybe even a cottage, and then a well-deserved retirement.

Research (using 2015 data) shows there is a serious flaw in this narrative for our millennial children. According to research from the Organization for Economic Co-operation and Development (OECD), featured in a National Post article, millennials are “less likely to reach middle-income levels in their 20s than their baby boomer parents.”

Why aren’t our kids making it to the middle class?

The research suggests “the middle class is shrinking — squeezed by high housing and education costs, displaced by automation and lacking the skills most valued in the digital economy.” The middle class is defined, for a single person in Canada, as requiring an income level of 75 to 200 per cent of the national median income, the article reports. For single Canucks, that’s $29,000 to about $78,000, the story notes.

One of the unfortunate aspects of this so-called dream is that in order to advance upwards, you have to achieve each step of the ladder. Education costs have skyrocketed in the last few decades, forcing younger people to have to take out huge education loans. Wages from work, the article notes, aren’t keeping up with the real cost of living. According to the OECD research, “between 2008 and 2016 real median incomes grew by an average of just 0.3 per cent per year,” compared to 1.6 per cent annually in the mid-1990s to 2000s.

So the wages from work aren’t sufficient for housing, with middle-income earners having to spend “almost a third of their income on accommodation,” the report states. In the 1990s, that figure was more like 25 per cent.  That’s why our millennials struggle to get to the “getting a house” stage, and if they can afford to start a family, is there anything left over for that dream cottage and longish retirement?

According to the Seeking Alpha blog, the answer is probably no. “At 1.1%, the Canadian saving rate is today near all-time lows, while Canadian debt is at all-time highs,” the blog notes. There’s an obvious reason – wages haven’t kept up with the cost of housing, so the younger folks are straining just to cover the mortgage. There’s less left for saving.

Research by Richard Shillington has found that even boomers aren’t awash in savings as they approach retirement. His study found that 47 per cent of Canadians aged 55 to 64 have “no accrued pension benefits,” and that for this age group, the median level of retirement savings was a paltry $3,000.

There’s still time to turn this ship around. Policy makers should continue to look at ways to help new people enter the housing market, and perhaps old ideas like housing co-operatives – popular when high interest rates restricted people from owning homes – should be revisited. Ways to make education less costly would be a huge help. Improved government pension benefits are a help, but why not continue to develop new workplace pension plans – or continue to encourage private employers to join publicly-run plans? Any policy that helps Canadians move up that middle class ladder is worth exploring.

If you’re among the many Canadians lacking a pension plan at work, the Saskatchewan Pension Plan is designed with you in mind. You determine how much you want to save, and they do the rest, investing your money through your working years and arranging to pay you a monthly lifetime pension at the finish line. Even a small start can make a big difference down the road.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

By Sheryl Smolkin

November is Financial Literacy Month in Canada. One of the building blocks of financial literacy is the ability to a develop a realistic budget and stick to it. After all, if you don’t have a roadmap or a financial GPS, it is impossible to figure out where you are going and how long it will take you to get there.

One place to start, is Squawkfox’s new series, 5 days to fix your budget. Kerry K. Taylor shows you how to set up a budget, find your net worth, set financial goals, and track your spending. Plus there are free budgeting downloads and software to make your financial life easier.

The Canadian Budget Binder also has a ten-part series published at the beginning of the year you may find useful.

1. How We Designed: Our Budget Step 1 – Gathering All the information
2. How We Designed: Our Budget Step 2 – Categories
3. How We Designed: Our Budget Step 3 – Tracking Reciepts
4. How We Designed: Our Budget Step 4 – Note-taking
5. How We Designed: Our Budget Step 5 – 5S Organization
6. How We Designed: Our Budget Step 6 – Who Does What and When?
7. How We Designed: Our Budget Step 7 – Balancing Our Budget
8. How We Designed: Our Budget Step 8 – Knowing our Coupon Savings
9. How We Designed: Our Budget Step 9 – Reading Our Bills
10. How We Designed: Our Budget Step 10 – Projected Expenses

Once you have made a budget, to stay on target Robb Engen says on Boomer & Echo, that you have to follow perennial advice from David Chilton (The Wealthy Barber). “Sometimes when people ask you to do something, you’ll have to reply, ‘I can’t afford it.’ It sounds so simple, but few of us have the will power to pass up the chance to go out with friends and family for fear of missing out.

For Robert, a guest blogger on Canadian Dream: Free at 45, matching expenses to income is an important way to stay solvent. That means if you are paid twice a month, try to shift certain big bills like mortgage payments, credit card bills or RRSP savings so all of these amounts don’t hit your bank account at the same time at the beginning of the month.

And finally, teach your children and grandchildren. Blonde on a budget Cait shares personal finance lessons she wished she had been taught in school. They include: how to read a pay stub; how to write a budget; how much to save and why; how to use a credit card; and, how to pay for post-secondary;

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Whether you are a student looking for a summer job, a new graduate seeking a career opportunity or a recently laid off worker looking for a new position, hunting for work can be nerve-wracking.

In Boomer & Echo, Robb Engen talks about cutbacks in the Alberta university sector where he is employed and how he would manage financially if he lost his job.

Mochimac shares her top 5 career regrets. She suggests that you see how little money you can live on so you can expand your career options.

Brighter Life blogger Kevin Press regales us with a humorous story about a seven hour interview for a job he did not get writing for a Manhattan magazine published for global investors. No regrets though, because soon after in Toronto he met his wife “the lovely Lisa.”

The Blunt Bean Counter Mark Goodfield discusses why references are a no win situation for past and future employers. That’s because employers feel compelled to give “plain vanilla” references because they are worried about defamation or negligent misrepresentation lawsuits.

And finally, on Canadian Dream – Free at 45, Dave tries to figure out how to productively spend the extra time he has now that he has finished courses for his CGA designation.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?”  Send us an email with the information to so*********@sa*********.com and your name will be entered in a quarterly draw for a gift card.